ISM

Information System Management

Dr. Ruchi Singhal

 MIS
Management Information System
 MIS Evolution
 MIS is an old management tool.
 Before the concept of computers, it was in use by business
managers for better mgmt and scientific decision making.
 MIS provides for the identification of relevant information
needs, the collection of relevant information, processing of
the information to become usable by the managers and
timely dissemination of processed information to the users of
the information.
 The MIS should not be identified just as a computer system.
 Computer like many other developments, has enriched MIS
and has made it more effective by enabling minute and
accurate processing of massive information.
 MIS in present form has been evolved from the following
disciplines in mgmt:
1. Management Accounting : The branch of accounting is
concerend with Cost Analysis which is useful for managerial
decision. Managerial accounting knowledge is of great help
in ascertaining the information requirements, carrying
analysis, in designing forms for providing information. e.g.
To determine the break even point, the information
required is about the fixed cost, variable cost and selling
price of the product. He also knows sources of information
availability. All these facts known to managerial
accountant’s were utilized in the evolution of MIS. Thus we
can say that MIS is an extension of managerial accounting.
2. Management Science : It means the application of scientific methods
and quantitative analysis technique for managing the problems. Mgmt
science techniques were incorporated in the MIS design to make
quantitative and analytical information available to the users of MIS.

3. Management Theory : There were several theories named as

behavioral, empirical, decision , quantitative and management process.
Out of these, decision theory and mgmt process are more relevant to
us. According to decision theory, the most important task of managers is
to make decisions. According to Management process theory,
management performs the functions of planning, organizing, staffing ,
directing and controlling. The knowledge of these management theories
enabled the MIS designers to ascertain the type of decisions made and
functions performed by executives in business organizations.
4. Computers : The computers were the main which were used
mainly for processing information and that’s why they are applied in
business situations. The reason for this is their speed of processing,
calculating and retrieval of data. In fact, computer technology has
been considered a major factor including MIS development. It has
come as a significant tool in information processing storage.

In the last we can say that MIS is an old mgmt tool and has
been derived from various disciplines in mgmt. It
maintained nad provided the necessary information to its
executives for planning, controlling and decision making
purposes.
ELEMENTS OF MIS

MIS is a system that aids management in making, carrying out and

controlling decisions. To understand the concept of MIS clearly, it is
necessary to understand its three elements viz. management,
information and system.
(a) Management : One definition of mgmt is that it is a process, in
the sense that it is a sequence of operations or functions necessary to
achieve certain end results. The functions of management are :
(1) Planning : It involves developing an outline of what has to be done
and the methods used to achieve these objectives.
(2) Organizing : It involves grouping the activities to be performed and
editing up the formal structure and coordination to carry them out.
(3) Staffing : It involves forecasting manpower requirements and
selection and training of personnel for the organization.
(4) Directing : It involves guiding, supervising , motivation
and coordination of people in the organization.
(5) Controlling : This activity refers to measurement of
actual performance and deviations from the standard
and correcting action to ensure the achievement of
objectives.
One of the major roles of managers in
organization is processing information and making
decision. Information systems are developed to help the
managers in their decision making process.
(b) INFORMATION :

Information is the processed data on which decisions and

actions are based. For the decisions to be meaningful, the
processed data must qualify for the following characteristics :

 Timely
 Accurate
 Complete and
 Given to the right person
(C) SYSTEM :
The system can be defined as :
“ A system is composed of interacting parts that
operate together to achieve some objective or purposes.”
A general model of a system consisting of inputs, outputs and
the system itself as shown in this figure :

INPUT SYSTEM OUTPUT

 Definition of MIS
 MIS Definition : “An integrated man/machine system for
providing information to support the planning, controls
organizing operations management and decision-making
functions in and organization. “
MIS can also be defined as an assemblage of facilities
and personnel for collecting, processing, storing, retrieving
and transmitting information that is required by one or more
managers in the performance of their functions.
MIS is thus a systematic procedure to provide relevant
information, in right time, in right format, to all levels in the
organization for providing support to the decision making
activities.
 Goals and Objectives of MIS:
It is necessary to develop the goals and objectives for the MIS which will support the business
goals. The MIS goals and objectives will consider management philosophy, policy constraints,
business risks, internal and external environment of the organization.
The typical statements of the goals are:
 Provide an online information on the stocks, markets and the accounts balances.
 The query processing should not exceed more than three seconds
 The focus of the system will be on the end user computing and access facilities.
Such statements of the goals and objectives enable the designer to set the direction and design
implementation strategies for the MIS plan.
Objectives of MIS :
1. To facilitate the decision making process in an organization by providing all levels of
management with accurate and timely information to help the managers in selecting best course
of action.
2. To provide each manager at every level, the planning and controlling tools and help in
highlighting the critical factors to be closely monitored for successful operation of the enterprise.
3. To help the management in getting the required information for controlling the activities of the
organisation.
4. To create a process of communication where the information is recorded, stored and retrieved
for decision recording, planning, operation and control with an organization.
5. To provide a system of people equipment procedures, documents and communications that
collects, validates, operates on transformers, stores, retrieves and presents data for use in
planning , budgeting , accounting , controlling and other management process.
8. Management Directed : Management should be responsible for setting system specifications
and it must play a key role in the subsequent trade off decisions that occur in system
development.
9. Integrated : Developed system of information should be an integrated one. It means that all
the functional and operational information subsystem should be tied together into one entity.
10. Common Data Flows : It means the use of common input, processing and output procedures
and media whenever possible or desirable.
11. Heavy Planning Element : A heavy planning element must be present in MIS development.
It means that MIS designers should keep in view future objectives and requirement of firm’s
information in mind.
12. Subsystem Concept : Even though the information system is viewed as a single entity, it
must be broken down into digestible subsystems which can be implemented one at a time by
developing a phasing plan.
13. Common Database : Although it is possible to achieve the basic objective of MIS without a
common database, thus paying the price of duplicate storage and duplicating the updating.
Hence the common database is a definite characteristics of MIS.
14. Computerized : It is possible to have an MIS without using a computer. But its use increases
the effectiveness of the system.
15. Relevance : The information given to manager should be relevant to his responsibilities and
authorities.
16. Accuracy : Information should not only be clear but should also be brief with more accuracy
as possible.
Characteristics of MIS
1. Flexibility: All organizations are dynamic and changes occur for a wide range of
reasons. A good MIS must be able to adopt to meet these changes.
2. Reliability: Reliability is crucial to performance and can be ensured only by thorough
checking and testing. Good standards help to make the MIS reliable as do validation
and security routines.
3. Simplicity: Anyone can design a complicated system but it takes real skill and
experience to design simple systems which are easy to operate and control..
4. Economy : The MIS should be cost-effective.
5. Helpfulness : Unless the MIS helps in the planning, operation and control of the
business, it is superfluous.
6. Consistency : Information system should be consistent. There must be a link between
all the data. Data should be corrected by the same method and scale and should be
presented at equal intervals.
7. Management Oriented : The development of an information system efforts should start
from an appraisal of management needs and overall business objectives.
 Importance of MIS :

1. Management Oriented : MIS is always management oriented and keeps in view that every
level of management gets the desired information.
2. Integrated : MIS is developed with an eye on its installation costs, its effectiveness ,
production capacity, stock levels, customer service and need of capital. As such it takes an
integrated view of the whole organization.
3. For Planning : Every business makes short term and long term planning based on past and
present information. Thus a good information system gives the various relevant information
regarding sales and production quantities, production methods , capital investments , stocks
etc. With the help of these information ,management can make future plans.
4. For Control : An effective MIS helps the management to know the deviations of actual
performance from the pre set targets and the reason thereof. Then the management takes the
steps to check the unfavorable variations and control the working of the organisation.
5. For Increasing Efficiency : MIS is important in increasing the efficiency of the employees.
6. Updated results : MIS helps the management in getting the updated results of the
departments and various decisions.
7. Highly Computerized : Being highly computerized MIS gives accurate information
regarding various activities of the organization and brings out the fact and the present
condition of various departments and divisions,
• 8. Fulfillment of Statutory Obligations : The information regarding business activities
are important not only for planning, management and control but legally those
information should also be given to shareholders and creditors who have stake in the
firm. A good MIS helps the management in fulfilling the legal obligations.
• 9. Awareness and Intelligence : MIS adds to the alertness, awareness and intelligence
of managers by supplying information in the form of progress and review report of an
ongoing activity.
• 10. Decision Making : Another role of MIS is to provide only that much information as
called for by managers specifically for purpose of decision making.
• Limitations of MIS:

• 1. One slacking subsystem would throw the entire integrated MIS out of the gear.
• 2. Highly sensitive and require continuous monitoring
• 3. Budgeting of MIS is extremely difficult.
• 4. Quality of output of MIS is basically governed by the quality of inputs and
process.
• 5. Is not a substitute for effective management. It is merely an important tool in the
hands of executives for decision making and problem solving.
• 6. May not have requisite flexibility to quickly update itself with changing needs of
time.
• 7. It takes into account mainly quantitative factors , thus it ignores the non-
quantitative factors like morale, attitude of members of the organization.
• 8. Less useful for making non-programmed decision making
• 9. Effectiveness decreases due to frequent changes in top management organizational
structure and operational team.
• Need For An MIS :

• 1. Government regulations which requires organizations to undertake many activities.

• 2. Wider Variety of products and services that organizations offer to their customers;
Managing this greater variety requires more sophisticated information systems.
• 3. Managers have to make decisions quickly. Competitors have learnt to adapt more rapidly
to their environment. An MIS that provides both sophisticated and timely information is a
necessary part of the required adaptation.
• 4. Managers now understand and utilize more sophisticated management techniques than
their predecessors did. Applying these techniques requires more sophisticated information
than was previously needed and this in turn requires a more sophisticated information
system.
• Integration Of MIS Structure :

The structure of MIS has been described in two ways- one on the basis of management
activity like strategic planning and the other on functional departments. Each of the
functional systems has its own data files used only by that function and also the data files
which may be required by other applications also. While integrating MIS structure, these data
files can be integrated into a common data base.
The frequently used Pyramid structure can be derived for explaining MIS.
Different management activities for functions will have different information processing
requirements.
MIS as a Pyramid: Higher Level mgmt Strategic Non programmed decisions
Planning

Management
Control

Lower Level Mgmt Programmed Decisions

Operational Control

Transactional
Processing
• Transaction processing will be much more significant in terms of processing time, no. of files
etc. compared to strategic planning. The transactional planning can be viewed as the base of
the pyramid, while strategic planning system can be viewed as the top of the ‘Pyramid’.
• The lower part of the pyramid describes structured well defined procedures more useful to
clerical personnel and lower management level. The top part of the pyramid involves more
adhoc, unstructured processes, providing support to higher level management.
• The decision process at the lower level will be more programmed while at the higher level
more non-programmed.
• DEVELOPMENT OR DESIGN OF MIS

Once the overall structure and plan for MIS for the organization is developed , the
plan has to be executed. The total plan is not implemented all at once. Generally, small
modules are designed and implemented. Each module is designed and implemented using
systems life cycle approach. The two common approaches for development of MIS are :
 Top Down Approach
 Bottom Up Approach
Bottom-Up Approach:
In this approach, initially the transactional processing modules are created and later
models for planning, control, strategic planning etc. are added. The system grows in
response to the increased needs of the users. In this approach, the system grows in
response to the real needs of the users.
The main disadvantages is that Integration or synthesis of various modules may
not be done efficiently and might turnout to be very costly. Various subsystems may need
to be redesigned due to the changing requirements and new interface with other
subsystems.
Top-Down Approach:
In this approach, firstly the analysis of objectives, environment and constraints are
done. Then the activities are identified. After that the decisions and actions are identified.
It is followed by identification of information needs for each decision and action. Then
• Then grouping of decisions and information requirements info subsystems. After that the
priorities are set for design and development of each sub-system.
The basic advantage of the Top-Down Method is that it forces from the beginning on
the integration of various subsystems. This avoids the redesigning of various
modules.
The main disadvantage is that it is usually difficult to make such large scale plans.
 Growth and Development of MIS :
 Nolan’s Growth Model for MIS:

This model is based on the fact that any organization will move through stages of maturity. This
model has identified four stages of Information System Growth but there are 6 stages in the
growth of MIS according to Nolan’s Model.
1. Initiation : The First Growing stage is known as Initiation Stage. In this stage, there is initial
introduction of computers to the organization. A few applications in the organization are
computerized. There are only a small number of users. This type of systems have elementary
technology to handle electrical and supervisory operations in the organization.
2. Contagion: The advantages of computerization are gradually realized by most of the people in
an organization. This leads to the proliferation of computers, networking technologies and
computer based system applications within an organization. During this stage rapid and
uncontrolled growth in the number and variety of IT applications take place. Many users adopt
computers in solving their IT- related problems.
3. Planning and Control : As demand for computerization increases, a need is realized for cost
benefit analysis. In this stage, organization gain control over the technology’s resources by
implementing formal control processes and standards. Thus, organizations are able to apply cost-
effectiveness criteria. This is imperative to plan for future MIS in cost effective manner .
However, controls sometimes become barriers in attaining potential benefits.
4. Integration Of Subsystems : In this stage, the use of new technology increases rapidly,
providing new benefits. Much emphasis is laid on integrating the applications. This comes with
realization of inter dependence of inflow of data from various sources for valid information.
• 5. Data Administration : here the emphasis is on regulating data for company wide
communication . Database capability is exploited as users understand the value of
information and are willing to share it.
• 6. Maturity : In the enhanced growth model, this stage is termed as the maturity stage. This
stage indicates that the application portfolio is complete and matches the objectives of the
organization. Now organization is geared up to plan future MIS needs for an organization.
• Location of MIS in the Organization – Concept and Design:

• For proper running of functions in any organization, MIS should be appropriately placed
in any organization. The exact location of MIS in any organization depends upon the type of
business the organization is in and how important is the information for the organization.
• E.g. in banking, transport, airlines etc. the data processing and MIS are prevalent in allareas
of the business.
• The various alternatives are :
• 1. As part of financial dept: In such type of structure, The MIS dept is placed under the
authority of Finance Manager. In many companies, the finance organized early control over
computer centre. As a result, information systems were built of as control decision aid rather
than planning decision aid.
• 2. Under the direct control of Chairman/Director/Chief Executive: This is done to give
more importance to the MIS functions and get acceptance from other areas of organization as
well. This is also done so that the accurate information can be supplied to everyone without
distortion.
• 3. MIS as a distinct entity : MIS is given a separate status or entity in the organization as
other functional area of the organization.
• MIS in the organization --- Concept:

– For designing the MIS for the organization, the information needs or requirement of the
different processes of the management are seen.
– (I) Info needs for planning: Planning requires analysis of external and internal
information. The internal information are :
– 1. Policies- Sales Discount, Stock Levels, Employee Information etc.
– 2. Financial Plans and Budgets – sales Budgets, Capital Expenditure Budgets, purchasing
budgets, labor schedule etc.
– 3. Forecasts- Sales forecast, site location, machinery, infrastructure needs etc.
– 4. Resources – logistics, finance, labor, employees etc.
– (II) Information Needs for organizing : Information regarding wages, salaries, staff
restructuring, takeovers, mergers etc.
– (III) Information Need For Controlling : Monitoring quality of services and products,
steady sales, good cash flows, monitoring feedback and performance.
– (IV) Information Need For Directing : keeping track of skills and performance of staff,
employing better infrastructure etc.
• MIS IN THE ORGANIZATION – DESIGN

• Various phases of designing MIS for the organization are :

• Study and Analysis : This phase includes duty of the organization goals, analyzing
resources, analyzing the human and technological capabilities, evaluating the MIS design
using cost benefit analysis.
• Design : This phase includes the determination and evaluation of subsystems,
determining the computerization needed, creation of databases, establishing the inputs
and outputs, taking feedback and documentation.
• Implementation :
 Organizing the computer infrastructure
 Training the end-users
 Modifying the modules based on feedback from users
 Debug and test the modules
 Evaluating the complete system
 Documentation
 Switching from Old System to New System
 Evaluating Periodically
 Maintenance Of System
 Planning for the expansion of new system
• Advantages of MIS:

• 1. It Facilitates planning : MIS improves the quality of plants by providing relevant

information for sound decision – making .
• 2. In Minimizes information overload : MIS change the larger amount of data in to
summarized form and there by avoids the confusion which may arise when managers are
flooded with detailed facts.
• 3. MIS Encourages Decentralization : Decentralization of authority is possibly when there is
a system for monitoring operations at lower levels. MIS is successfully used for measuring
performance and making necessary change in the organizational plans and procedures.
• 4. It brings Co ordination : MIS facilities integration of specialized activities by keeping each
department aware of the problem and requirements of other departments.
• 5. It makes control easier : MIS serves as a link between managerial planning and control. It
improves the ability of management to evaluate and improve performance. The used
computers has increased the data processing and storage capabilities and reduced the cost .
• 6. MIS assembles, process, stores, Retrieves, evaluates and disseminates the information
• 7. MIS helps better understand the business itself as it begins with the basic definition of each
and every data entity and its attributes.
• 8. MIS calls for systemization of operations for an effective system design which to leads to
streamlining of operations.
 ROLE OF MIS IN AN ORGANIZATION
 

 The role of the MIS in an organization can be compared to the role of heart in the body. The
information is the blood and MIS is the heart. In the body the heart plays the role of supplying
pure blood to all the elements of the body including the brain. 

 The heart works faster and supplies more blood when needed. It regulates and controls the
incoming impure blood, processes it and sends it to the destination in the quantity needed. It
fulfills the needs of blood supply to human body in normal course and also in crisis. The MIS
plays exactly the same role in the organization. The system ensures that an appropriate data is
collected from the various sources, processed, and sent further to all the needy destinations.

 The system is expected to fulfill the information needs of an individual, a group of individuals,
the management functionaries: the managers and the top management.  The MIS satisfies the
diverse needs through a variety of systems such as Query Systems, Analysis Systems, Modeling
Systems and Decision Support Systems the MIS helps in Strategic Planning, Management
Control, Operational Control and Transaction Processing. The MIS helps the clerical personnel in
the transaction processing and answers their queries on the data pertaining to the transaction, the
status of a particular record and references on a variety of documents.  
 
 
• The MIS helps the junior management personnel by providing the operational data for
planning, scheduling and control, and helps them further in decision making at the operations
level to correct an out of control situation.  
 
• The MIS helps the middle management in short them planning, target setting and controlling
the business functions. It is supported by the use of the management tools of planning and
control. 
• The MIS helps the top management in goal setting, strategic planning and evolving the
business plans and their implementation.
•                  
• The MIS plays the role of information generation, communication, problem identification
and helps in the process of decision making. The MIS, therefore, plays a vita role in the
management, administration and operations of an organization.
 Design and Development of MIS
The following steps are followed to design the Management Information System:
1. Identify the information needs at all levels of the management:
There are problems in every growing business organization, but most of the time a clear
definition of problems and a priority system for their solution is not known. Thus, as a first
step in MIS design, the management should identify, in detail, the problems to be solved.
2. List the objectives of MIS and anticipated benefits:
The users must define the system objectives in terms of information demands. For
example, in several organizational departments, prior to the designing of an information
system; the system objective was the automation of hundreds of reports without looking at
the management of tasks related to functional or resource system represented by the
report, These are training needs , employee relations, safety, recruitment, staffing. Such
attention is possible only by automation of records or processing of existing data, otherwise
the true objectives of the organization represented by the system are overlooked. The
system objective should be defined in terms of what a decision-maker can do and how
effectively he would be able to function after his information requirements have been
complied with.
 The basic questions which are asked, while listing down the objectives of the MIS
system design are:
• What is the purpose of the system?
• Who are the users and what are their objectives?
• What is it expected to do?
• Why is it needed?

3. Identify the systems constraints (internal and external):

The systems constraints are also called problem boundaries or restrictions under
which objectives may be achieved. These constraints (or limitations) in the design of
the system are the creation of the manager-user or the designer himself, because of
his limited freedom of action in designing a system, to achieve the objectives.
• The internal constraints are viewed in terms of:
organizational policy ,top management support, cost and resource, acceptance
manpower needs and availability.
• The external constraints are mainly concerned with the customer. Ordered entry,
billing and other systems that interface with the systems of the customer must be
designed with the customer's need in mind,
4. Determine the information needs and resources:
The system design must begin with determining the real information needs
of the management information that can increase the perception of managers in
critical areas like problems, alternatives, opportunities and plans. In other words, if a
decision maker can define his objectives and spell out the items of information that
are needed to attain the objectives, then he/she is at least half way through in a good
system design. A decision maker needs information for a variety of reasons
concerned with the management process. The type of information which is required
at various times and for various purposes depends on two factors:
• Personal managerial attitudes like knowledge of information systems, managerial
style, perception of information needs etc of the individual manager.
• Organizational environment like nature of the company, level of management,
structure of the organization.
• After estimating the need of information and clearly defining the objectives, the next
step in Management Information System design is to determine the sources of
information. The sources of information may be categorized as follows:
• Internal sources: It is in the form of written materials like file records, letters, reports
containing information about the existing system etc.
• External sources: It may be in the form of trade and government publications,
personal interviews of managers and Personal interaction with decision makers.
5. Develop the alternative conceptual design and selecting one:
The conceptual design of MIS is considered as a skeleton of the NL-S, which guides
and restricts the form of the detailed design. The concept of design of a
Management Information System of patterns of information flow, channels of
information role of decision Makers and competitors, etc. The alternative of a system
can be evaluated on the basis of the following:
• Compare anticipated performance of the conceptual design with respect to objectives
of the system developed earlier.
• For quantified comparison amongest systems, prepare a preliminary cost
effectiveness data for the system.
• Examine the quality of databases and information to be made available. Study the
number of operations, dispersions and duplication of files, and potential breakdown
points.
• Expand the conceptual designs in greater detail if none of these provide a preferred
design.
6. Preparing the conceptual design report:
The conceptual design report is a proposal prepared for the expenditure of funds
and possible changes in the organizational setup. Since this report is submitted to
management, it must contain the summary of problems that necessitate the system,
the objectives, the general nature of the system, reasons why this concept was
selected over others, and time and resources required to design and implement the
system.
 PRE-REQUISITES FOR EFFECTIVE MIS
The pre-requisites are:
1. Qualified systems and management staff
2. Control and maintenance of MIS.
3. Common data base
4. Evolution of MIS
5. Support of top management.
I. Qualified systems and management staff:
• The pre-requisite of effective MIS is that it should be managed by qualified officers.
These officers (experts) should understand clearly the views of their fellow officers.
For this, organizational management base should comprise of two categories of
officers:
• Systems and computer experts; and
• Management experts.
 PRE-REQUISITES FOR EFFECTIVE MIS
• Management experts in addition to their expertise in their subject area, they should
also be capable of understanding management concepts to facilitate the
understanding of problems faced by the concern. They should also be clear about the
process of decision making and information requirements for planning and control
functions.
• Systems and computer experts should also understand quite-clearly the concepts and
operations of a computer. This basic knowledge of computers will be useful to experts
and will place them in comfortable position, while working with systems, technicians
in designing or otherwise, of the information system.
• The pre-requisite is confronted with a problem of procurement of suitable experts.
This problem is dealt by recruiting fresh candidates and developing them to meet
specific requirements. Also, it is difficult to retain such experts on long term basis as
their status in the job market is quite high.
 PRE-REQUISITES FOR EFFECTIVE MIS
2. Control and maintenance of MIS:
• Control of the MIS means the operations of the system as it was designed to operate.
Sometimes, users develop their own procedure or short cut methods to use the
system which reduces its effectiveness. To check such habits Of users, the
management at each level in the organization should device checks for information
system control.
• Maintenance is closely related to control. There are times the need for improvement
to the system will be discovered. Formal methods for changing and documenting
changes must be provided.
 PRE-REQUISITES FOR EFFECTIVE MIS
3. Common data base:
• It is an integrated collection of data and information which utilized by several
information sub-systems of an organization A common data base may be defined as a
super-file which consolidates and integrates data records formerly stored in memory
separate data files.
Such a data base can be organized as an integrated collection of data records into a
single super-file or it can be organized as an integrated collection of several data files.
The organization of a common data base allows it to be accessed by several
information sub-systems and thus, eliminates the necessity of duplication in data
storage, updating, deletion and protection. The problems which are usually observed
during the stages of creating a common data base in an existing organization are as
follows:
– Maintenance of common data base performance.
– Maintenance at data records and accessibility of common data base.
– Keeping the common data base adoptable.
 PRE-REQUISITES FOR EFFECTIVE MIS
– Organizing data in common data base.
– Maintenance of common data base security

Normally, the data base is sub-divided Into the major information sub-sets needed to
run a business.
• These sub-sets are:
– Vendor file
– Personnel file
– Inventory file
– General ledger account of file
– Container and sales file

The main characteristics of data base are that each sub-system utilizes same data
and information kept in the same file to satisfy its information needs.
 PRE-REQUISITES FOR EFFECTIVE MIS
• The other important characteristics of data base are as follows:
• Its act of being used as a common data source, to various users, helps in
avoiding duplication of efforts in storage and retrieval of data and
information.
• It is available to authorized persons only.
• It is controlled by a separate authority established for the purpose known, as
data base management system.
• It is users-oriented.
• The maintenance of data in data base requires computer hardware, software and
experienced computer's professionals. In addition, it requires a good data collection
system equipped with experts who have first-hand knowledge of the operations of the
company and its information needs. The data base structured on above lines is
capable of providing/ meeting information requirements of its executives. which is
necessary for planning, organizing and controlling the operations of the business
concern. But it has been observed that such a data base meets the information needs
of control.
4. Evolution of MIS:
An effective MIS should be capable of meeting the information requirements of
its executives in future as well. This capability can be maintained by evaluating the
MIS and taking appropriate timely action. The evolution of MIS should take into
account the following points:
• Ascertaining the views of users and the designers about the capabilities and
deficiencies of the system.
• Guiding the appropriate authority about the steps to be taken to keep the
effectiveness of MIS alive.
• Examining whether enough flexibility exists in the system, to cope up with any
expected information requirement in future.
5. Support of top management:
For a management information system to be effective, it is essential that it must
receive the full support of top management.
• The reasons for this are as follows:
– Subordinate managers are usually lethargic about activities which do not receive the
support of their superiors (top management).
– The resources involved in computer-based information system are large and are
growing larger and larger in view of importance gained by management information
system.
• To gain the support of top management, the officers should place, before top
management, all the supporting facts and state clearly the benefits which will accrue
from it to the organization.
This step will certainly enlighten management and will change their attitude towards
MIS. Their whole hearted support and co-operation will help in making MIS an
effective and successful one.
 COMPONENTS OF MIS AND THEIR RELATIONSHIP
• A management information system is made up of five major components
namely people, business processes, data, hardware, and software. All of
these components must work together to achieve business objects.
• People - These are the users who use the information system to record the
day to day business transactions. The users are usually qualified professionals
such as accountants, human resource managers, etc. The It department
usually has the support staff who ensure that the system is running properly.
• Business Procedures - These are agreed upon best practices that guide and
all other components on how to work efficiently. Business procedures are
developed by the people i.e. users, consultants, etc.
• Data — The recorded day to day business transactions are data for the
organization. For a bank, data is collected from activities such as deposits,
withdrawals, etc.
 COMPONENTS OF MIS AND THEIR RELATIONSHIP
• Hardware — Hardware is made up of the computers. printers, networking
devices, etc. The hardware provides the computing power for processing
data. It also provides networking and printing capabilities. The hardware
speeds up the of data into information.
• Software — These are programs that run on the hardware. The software is
broken down into two major categories namely system software and
applications software. System software refers to the operating system i.e.
Windows, Mac OS, and Ubuntu, etc. Applications software refers to
specialized software for accomplishing business tasks such as a Payroll
program, banking system, point of sale system, etc.
• Design, development Information for
and documentation Decision Making
 RECENT DEVELOPMENTS IN MIS
The recent developments in field of MIS are as follows:

1. Enterprise resource planning (ERP): ERP is an acronym for Enterprise Resource

Planning. Enterprise Resource Planning (ERP) software applications help businesses to
manage and connect information from all core areas of the organization with the aim
of improving effective decision making. ERP software solutions promote visibility
throughout the entire organization, allowing decision makers to improve business
operations such as; inventory management, accounting, order management, human
resources, supply chain, product lifecycle, customer relationship management (CRM)
among others. ERP software should serve as the focal point for managing all
important aspects of a business. ERP systems typically include the following
characteristics:
 RECENT DEVELOPMENTS IN MIS
• An integrated system that operates in real time (or next to real time), without relying
on periodic updates.
• A common database, which supports all applications. e A consistent look and feel
throughout each module.
• Installation of the system without elaborate application/data integration by the
Information Technology (IT) department.

2. Customer relationship management (CRM): Customer relationship management

(CRM) refers to a strategy widely used by companies and organizations (including
related integrated information systems and technology, often in the form of software)
to record and manage their overall data and interactions with current, past and
potential customers.
 RECENT DEVELOPMENTS IN MIS
CRM works to ensure that all customer-interfacing organizational functions (i.e., sales,
marketing, technical support) are efficient and synchronized, ensuring that former and
potential customers are adequately and appropriately served. The most critical
purpose of CRM is to manage each instance of the company's customer interaction.
CRM manages, stores and disseminates customer information with many built-in tools
that can be applied to raw data pertaining to a customer or any given category of
customer. For example, data may be analyzed to segregate customers according to
demographic, occupation and age, etc. CRM plays a vital role in an organization's
marketing and research departments. For example, if data indicates that a majority of
customers are from Delhi, the sales and marketing department can customize
strategies for that state.
 RECENT DEVELOPMENTS IN MIS
The overall goals are:
• To find, attract, and win new clients,
• nurture and retain those the company already has,
• entice former clients back into the fold,
• reduce the costs of marketing and client service.
Customer relationship management describes a company-wide business strategy
including customer-interface departments as well as other departments.

3.Enterprise feedback management (EFM):

EFM is a system of processes and software that enables organizations to centrally

manage deployment of surveys while dispersing, authoring and analysis throughout
an organization.
EFM systems typically provide different roles and permission levels for different types
of users, such as novice survey authors, professional survey authors, survey reporters
and translators. EFM can help an organization establish a dialogue with employees,
partners, and customers regarding key issues and concerns and potentially make
customer specific real time interventions. EFM consists of data collection, analysis and
reporting. Prior to EFM, survey software was typically deployed in deparfrnents and
lacked user roles, permissions and workflow. EFM enables deployment across the
enterprise, providing decision makers with important data for increasing customer
satisfaction, loyalty and lifetime value. EFM enables companies to look at customers
and to better respond to customer needs.
 EFM applications support complex survey design, with features such as question and
page rotation, quota management and advanced skip patterns and branching. The
software typically offers advanced reporting with statistical analysis and centralized
panel management. EFM applications are often integrated with external platforms,
most typically with CRM systems but also with HRIS systems and generic web portals.
• 4. E-procurement: Electronic procurement sometimes also known as supplier
exchange, is the business to business or business to customers or business to
government purchase and sale of supplies, work and services through the internet, as
well as other information and networking systems, such as ERP. E-procurement is
done with a software application that includes features for supplier management and
complex auctions. The new generation of E-Procurement is now on-demand or a
software as- a-service.
There are seven main types of e-procurement:
• Web-based ERP (Enterprise Resource Planning): Creating and approving purchasing
requisitions, placing purchase orders and receiving goods and services by using a
software system based on Internet technology.
• e-MRO (Maintenance, Repair and Overhaul): The same as web based ERP except that
the goods and services ordered are non product related MRO supplies.
• e-sourcing: Identifying new suppliers for a specific category of purchasing
requirements using Internet technology.
• e-tendering: Sending requests for information and prices to suppliers and receiving
the responses of suppliers using Internet technology. May or may not involve e-
auctions.
• e-reverse auctioning: Using Internet technology to buy goods and services from a
number of known or unknown suppliers.
• e-informing: Gathering and distributing purchasing information both from and to
internal and external parties using Internet technology.
• e-market sites: Expands on Web-based ERP to open up value chains. Buying
communities can access preferred suppliers; products and services, add to shopping
carts, create requisition, seek approval, receipt purchase orders and process
electronic invoices with integration to suppliers; supply chains and buyers; financial
systems.

5. Supply chain management: Supply chain management (SCM) is the active

management of supply chain activities to maximize customer value and achieve a
sustainable competitive advantage.
 It represents a conscious effort by the supply chain firms to develop and run supp
chains in the most effective & efficient ways possible. Supply chain activities cover
everything from product development, sourcing, production, and logistics, as well

as the information systems needed to coordinate these activities. The concept of

Supply Chain Management (SCM) is based on two core ideas:
• The first is that practically every product that reaches an end user represents the
cumulative effort of multiple organizations. These organizations are referred to
collectively as the supply chain.
• The second idea is that while supply chains have existed for a long time, most
organizations have only paid attention to what was happening within their "four
walls." Few businesses understood, much less managed, the entire chain of activities
that ultimately delivered products to the final customer. The result was disjointed and
often ineffective supply chains.
The organizations that make up the supply chain are "linked" together through
physical flows and information flows.

Physical Flows: Physical flows involve the transformation, movement, and storage of
goods and materials. They are the most visible piece of the supply chain. But just as
important as information flows.

Information Flows: Information flows allow the various supply chain partners to
coordinate their long-term plans, and to control the day-to-day flow of goods and
materials up and down the supply chain, and as important as information flows.
6. Data mining: Data mining is the practice of automatically searching large stores of
data to discover patterns and trends that go beyond simple analysis. Data mining uses
sophisticated mathematical algorithms to segment the data and evaluate the
probability of future events. Data mining is also known as Knowledge Discovery in
Database (KDD).
• The key properties of data mining are:
– Automatic discovery of patterns;
– Prediction of likely outcomes;
– Creation of actionable information;
– Focus on large data sets and databases.

Data mining is a process used by companies to turn raw data into useful information.

By using software to look for patterns in large batches of data, businesses can learn
more about their customers and develop more effective marketing strategies as well
as increase sales and decrease costs.
• Data mining depends on effective data collection and warehousing as well as
computer processing.
• The data mining process breaks down into five steps. First organizations collect data
and load it into their data warehouses. Next, they store and manage the data, either
on in-house servers or the cloud. Business analysts, management teams and
information technology professionals access the data and determine how they want
to organize it. Then, application software sorts the data based on the user's results,
and finally, the end user presents the data in an easy-to-share format, such as a graph
or table.
7. Data Warehousing: Data warehousing is the process of constructing and using a data
warehouse. A data warehouse is constructed by integrating data from multiple
heterogeneous sources that support analytical reporting, structured and/or ad hoc
queries, and decision making. Data warehousing involves data cleaning, data
integration, and data consolidations.
• Three main types of Data Warehouses are:

(a) Enterprise Data Warehouse: Enterprise Data Warehouse is a centralized

warehouse. It provides decision support service across the enterprise. It offers a
unified approach for organizing and representing data. It also provides the ability
to classify data according to the subject and give access according to those
divisions.
(b) Operational Data Store: Operational Data Store, which is also called ODS, are
nothing but data store required when neither Data warehouse nor OLTP systems
support organizations reporting needs. In ODS, Data warehouse is refreshed in
real time. Hence, it is widely preferred for routine activities like storing records of
the Employees.

© Data Mart: A data mart is a subset of the data warehouse. It is specially designed
for a particular line of business, such as sales, finance, sales or finance. In an
independent data mart, data can collect directly from sources.
8. Electronic Commerce: Electronic commerce, commonly known as e-commerce refers
to the buying and selling of products or services over electronic systems such as the
Internet and other computer networks. However, the term may refer to more than
just buying and selling products online. It also includes the entire online process of
developing, marketing, selling, delivering, servicing and paying for products and
services. The amount of trade conducted electronically has grown extraordinarily with
widespread Internet usage. The use of commerce is conducted in this way, spurring
and drawing on innovations in electronic fund transfer, supply chain management,
internet marketing, online transaction processing, electronic data interchange (EDI),
inventory management systems, and automated data collection systems. Modern
electronic commerce typically uses the World Wide Web at least at one point in the
transactions life-cycle, although it may encompass a wider range of technologies such
as e-mail, mobile devices and telephones as well.
• A large percentage of electronic commerce is conducted entirely in electronic form for
virtual items such as access to premium content on a website, but mostly electronic
commerce involves the transportation of physical items in some way. In e-commerce,
exchanges occur between two parties over some
• electronic medium, typically the Internet. These exchanges are most commonly
transactions between companies and consumers, wherein consumers purchase
products and services by credit card payment over a secured website. These
exchanges, however, can also include transactions between companies as well as
between individuals. An example of business-to-consumer e-commerce would be an
online store such as Amazon.com. Anyone with Internet access and a credit card can
access the website, browse products and services, make a selection, and purchase a
product by credit card payment with the assurance of delivery in the mail.
• An example of e-commerce between individuals, or between two consumers, would
be an online marketplace such as eBay.com. Similar to the example above, anyone
with Internet access and a credit or debit card can browse and purchase available
products.
• The difference here is that products are being sold by individual sellers (other
consumers) rather than one large online store.
 MIS APPLICATIONS IN BUSINESS
• Every business has the core functional departments of Marketing, Finance, HR and
Manufacturing. MIS is applied in the business for these functional areas.

(A) MARKETING INFORMATION SYSTEM

• Marketing information system can be defined as a computer-based system that works
in conjunction with other functional information systems to support the firm's
management in solving problems that relate to marketing the firm's products.
• A marketing MIS supports activities throughout the many activities of marketing
departments. Some of the typical sub systems of a marketing MIS are marketing
research, product development and delivery, promotion and advertising, product
pricing and sales analysis.
• One of the most common uses of a marketing MIS is to produce sale s reports. These
are typically produced on a regular schedule, such as by week, month and quarter.
Reports can be organized by sales representative, product, customer or geographic
area. Such reports allow managers to see which aspects of sales are doing well and
which ones need attention.
• Perhaps one sales representative has suddenly experienced a drop in sales by losing
one major customer and needs some support to develop some new leads. If there are
only a handful of sales representatives sharing one office, a manager might be able to
pick up on this just by talking to everyone. However, what if a manager has to oversee
more than 100 sales representatives in 12 different offices around the nation? Then a
specialized information system that provides regular updates in a meaningful format is
needed for making effective decisions.
 The simplified view of Marketing IS model is shown below:
• Marketing Research Sub system - In this sub system a systematic gathering, recording
and analyzing data relevant to marketing of goods and services takes place. Data can
be collected from internal sources, government publications, periodicals and books,
marketing research agencies and conducting field research, both primary data and
secondary data collected for the purpose.
• Marketing Intelligence Sub system - It is a Set of procedures and sources used by
managers to obtain everyday information about development in marketing
environment. By reading books, trade publications, business newspapers: talking to
customers, suppliers and distributors, industrial espionage.
• Database - The data used by the output sub systems come from the database. Some
of the data in the database is unique to the marketing functions, but much is shared
with another functional Ares.
• Product Sub System- To assess whether different products or product lines are
contributing to objectives of organization; SFA: Sales force automation software
provides information relating to performance of each product. Market segmentation
and Product positioning related information are also provided by product sub system.
• Pricing Sub System- Information related to Price fixation, Value for money,
Competitors' price, Cost plus price, Price change, upward revision and downward
revision are part of pricing subsystem.
• Distribution Sub System- Identification of channels, Evaluation of channels and
Channel selection related important information is provided by this sub system.
• Promotion Sub System- Promotion mix (Advertising, Sales promotion and Personal
selling) and Promotion budget related information could be obtained through this
output sub system.
(b) FINANCIAL INFORMATION SYSTEM:

A financial MIS provides financial information for managers to make daily decisions on
operations within the organization. Most systems provide these functions:
• Integrate financial information from multiple sources.
• Provide easy access to financial information in summarized form.
• Enable financial analysis using easy-to-use tools.
• Compare historic and current financial activity.

A financial MIS often has a number of sub systems, depending on the type of
organization. These include systems to analyze revenues, costs and profits, auditing
systems for both internal and external purposes and systems to manage funds. A
financial MIS can also be used to prepare reports for third parties, such as external
auditors or shareholders.
• Internal Audit sub system - It gathers relevant data from internal sources such as
shareholders.
• Financial Intelligence Sub system: It gathers relevant data from external environment.
• Forecasting Sub system - It forecast the estimate of future financial outcomes for an
organization.
• Fund Management sub system- It tracks information flow related to acquisition,
distribution and administration of funds.
• Control Sub system- It helps in exercising control related to financial aspects of
organizational aspects.
©HR INFORMATION SYSTEM
A HRIS, which is also known as a human resource information system or human
resource management system (HRMS), is basically an intersection of human resources
and information technology through HR software. This allows HR activities and
processes to occur electronically.
• To put it another way, a HRIS may be viewed as a way, through software, for
businesses big and small to take care of a number of activities, including those related
to human resources, accounting, management, and payroll. A HRIS allows a company
to plan its HR costs more effectively, as well as to manage them and control them
without needing to allocate too many resources toward them. In most situations, a
HRIS will also lead to increases in efficiency when it comes to making decisions in HR.
The decisions made should also increase in quality-and as a result, the productivity of
both employees and managers should increase and become more effective.
• The simplified view of HRIS model is shown below:
• There are a number of solutions offered to a company that adopts a HRIS. Some of
these include solutions in training, payroll, HR, compliance, and recruiting. The
majority of quality HRIS systems include flexible designs that feature databases that
are integrated with a wide range of features available. Ideally, they will also include
the ability to create reports and analyze information quickly and accurately, in order to
make the workforce easier to manage. Through the efficiency advantages conferred
by HRIS systems, a HR administrator can obtain many hours of his or her day back
instead of spending these hours dealing with non-strategic, mundane tasks required
to run the administrative-side of HR.
• Similarly, a HRIS allows employees to exchange information with greater ease and
without the need for paper through the provision of a single location for
announcements, external web links, and company policies. This location is designed to
be centralized and accessed easily from anywhere within the company, which also
serves to reduce redundancy within the organization. For example, when employees
wish to complete frequently recurring activities such as requests for time off or
electronic pay stubs and changes in W-4 forms-such procedures can be taken care of
in an automated fashion without the need for human supervision or intervention. As a
result, less paperwork occurs and approvals, when deigned, may be appropriated
more efficiently and in less time.
(D) Manufacturing Information System:

A management information system designed specifically for use in a manufacturing

environment. The role of manufacturing information systems is to support
manufacturing operations by providing relevant and timely information for decision
making at different levels of the company hierarchy. It also automates and secure the
sequencing of manufacturing and business processes.

The simplified view of Manufacturing IS model is shown below:

• The Accounting Information System gathers internal data describing the
manufacturing operation and environmental data that describes the firm's
transactions with its suppliers.
• Industrial engineering sub system - It is concerned with analysis of production system
and making recommendations for improvement. It consists of special data gathering
projects from inside the firm. It provides proper production standards.
• Manufacturing Intelligence sub system - It gathers data that includes recent updates
from the activities of labor unions and supplier, raw material, machinery etc from the
environment.
• The Production Sub system - It measures the production process in terms of Time i.e.
tracking the work flow step by step.
• The Inventory Sub system - It measures the production process in terms of Volume of
production (transformation of raw materials in to finished products).
• The Quality Sub system - It measures the quality of materials as they are transformed
during the production process.
• The Cost Sub system - It monitors and measures the cost required during the
production process.